Wal-Mart in Mexico

I will say that I miss the old Always Low Prices blog that I worked with Kevin on. It was an opportunity to learn and investigate various aspects of the retailer that often get lost in discussions surrounding it. Just yesterday, I had the opportunity to correct somebody misinformed about the company.

Walmart has come in the crosshairs of people who think they can gain mileage from attacking the company. A successful company like WM will always have its detractors. I, on the other hand, admire the company for the success that it has had both for its shareholders and for its effects on society as a whole. This article on Wal-Mart in Mexico is another example of the transformative effects the company can have:

One possible reason for the different receptions in the United States and Mexico is that, by most estimates, as many as 80 percent of Mexicans do not have bank accounts. Because Wal-Mart plans to offer such accounts, local groups apparently had difficulty trying to stir up public outrage.

Working-class Mexicans have been largely shut out of traditional banks by high fees, minimum balance requirements and intimidating paperwork. Community banks barely exist.

In this venture, Wal-Mart, the world's largest retailer, still might be the little guy, at least for now. Among Wal-Mart's competitors in the banking business are global banks like Citigroup and HSBC, which have made almost no effort to attract the vast bulk of working- class Mexicans.

The authorities, beginning with the governor of the Mexican central bank, Guillermo Ortiz, have blessed the entry of retailers into banking as a way to reach people without accounts.

In its statement last week announcing that Wal-Mart, along with four other banks, had received preliminary approval, the Finance Ministry said that it expected the new banks to create more competition and serve markets that the country's five dominant banks ignore.

Wal-Mart, as readers of the old ALP will know, has had effect on raical relations in Mexico because of their use of common looking people in their advertising. What they did to integrate people of all shades of skin color and of continetal orgin, they can do in financial services for the poor of that country. Cheap banking is something we take for granted here in the U.S., but is necessary for advanced economies. This is great news and will probably illustrate what free market capitalism can achieve without government social engineering. I used to think that free market capitalism was amoral, but Wal-Mart has gone a long way to dispel that notion with me.


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This page contains a single entry by Bob published on November 24, 2006 2:08 PM.

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